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On Friday, Raymond (NSE:RYMD) James made adjustments to its financial outlook on Shift4 Payments (NYSE: FOUR), reducing the price target from $140.00 to $130.00, while still maintaining a Strong Buy rating on the company’s stock. Currently trading at $79.29, InvestingPro analysis suggests the stock is undervalued, with its RSI indicating oversold territory. The revision comes as the firm recalibrates its estimates in response to management’s intra-quarter commentary.
According to the analysts at Raymond James, first-quarter revenue for Shift4 Payments is projected to constitute between 19-21% of the full-year 2025 revenue, prompting a downward revision of approximately 8% to $344 million, compared to the consensus of $359 million. The expected EBITDA was also decreased by roughly 8%, despite the reaffirmation of a 45% margin outlook for the first quarter. This comes as the company maintains strong fundamentals, with impressive revenue growth of 29.86% over the last twelve months. The full-year 2025 revenue and EBITDA estimates remain largely unchanged.
The firm emphasized that the updated guidance from Shift4 Payments management did not stem from any new macroeconomic weakness. Instead, it was a clarification of the anticipated seasonality for 2025, which aligns with patterns observed in previous years. However, the analysts noted that it is important to continue monitoring restaurant spending data, as the Fiserv (NYSE:FI) SMB index indicated a month-over-month deceleration of 180 basis points to -2.4% in March.
In their analysis, Raymond James highlighted the current valuation of Shift4 Payments stock, which is trading at approximately 8 times their projected pro-forma 2026 EBITDA, or 9 times when adjusted for capital expenditures and equipment depreciation and amortization. The stock is also trading at around 11 times the fully taxed free cash flow, with expectations of over 20% normalized free cash flow growth. InvestingPro data shows the stock trading at a P/E ratio of 31.33, which appears attractive relative to its growth rate. The firm concluded that despite the revised estimates, the risk/reward profile for Shift4 Payments remains very favorable. For deeper insights into Shift4’s valuation and 10+ additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Shift4 Payments has announced its intention to acquire Global Blue for an enterprise value of $2.5 billion. This acquisition is expected to significantly enhance Shift4’s international presence, especially in the Asia-Pacific region, and provide access to over 75,000 retailers. Global Blue reported a 20% year-over-year revenue increase to €131 million ($137 million) for its fiscal third quarter and a 31% rise in adjusted EBITDA to €52 million ($55 million). RBC Capital Markets maintains an Outperform rating on Shift4 Payments with a $154 price target, highlighting the potential for substantial growth in the retail sector due to this acquisition.
DA Davidson also reiterated its Buy rating with a $124 price target for Shift4 Payments, emphasizing the strategic value of the Global Blue acquisition. Additionally, there are rumors of a potential acquisition of Smartpay, a New Zealand-based POS solutions provider, which could further bolster Shift4’s market position. Although the Smartpay acquisition remains unconfirmed, DA Davidson analysts view it as a continuation of Shift4’s strategic growth through mergers and acquisitions.
In another development, Shift4 Payments’ CEO Jared Isaacman has expressed his intention to resign if confirmed for the role of NASA Administrator, reducing his voting power in the company from 80% to about 25%. Despite these impending leadership changes, DA Davidson maintains confidence in the company’s stock, suggesting a stable financial outlook. Investors will be closely monitoring these developments and their potential impact on Shift4 Payments’ future performance.
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